Distribution Comparisons of EAC Cost Growth
bounds from data, unable to obtain subjective bounds from subject matter experts, and unable to find a relevant document to reference, the analyst’s own subjective designations of low, medium, and high uncertainty are a last resort (DoD, 2014). Anecdotally, we believe the ToLR may not be necessarily used as a last resort but as an initial crosscheck.
Many cost-estimating challenges can be traced to overoptimism. Baselines from program offices tend to represent idealized conditions and fail to consider the complexity of developing new technology and the difficulty of integrating technology into new systems (GAO, 2020).
Many cost-estimating challenges can be traced to overoptimism. Baselines from program offices tend to represent idealized conditions and fail to consider the complexity of developing new technology and the difficulty of integrating technology into new systems (GAO, 2020). This optimism about risks that are out of the estimators’ control may cause cost estimators to generate cost curves which do not account for enough risk, especially for the probabilities of high-cost overruns. Cost estimators and PMs need to be aware of historical data and how well past estimates have performed against the actual costs of those programs. The aim of this article is to replicate the ToLR process for EAC growth of historical aircraft DoD Acquisition Category (ACAT) I research, development, test and evaluation (RDT&E) programs differentiated by common WBS levels. A Major Defense Acquisition Program is an ACAT I program if it has either (a) total expenditure of RDT&E costs greater than $525 million (fiscal year [FY] 2020 constant dollars); (b) total expenditure of procurement costs greater than $3.065 billion (FY 2020 constant dollars); or (c) is specifically designated by the milestone decision authority as special interest (DoD, 2020). To the best of our knowledge, such analyses with empirical data consisting of budget growth have not been documented in the literature.
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Defense ARJ , Spring 2025, Vol. 32 No. 1
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